Mass. State Senate Passes Ban on Paying Nonprofit Trustees

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May 29, 2012; Source: Boston Herald

A bill submitted by Massachusetts State Sen. Mark Montigny passed by the state Senate as an amendment to the budget would ban payment to trustees of nonprofits that receive government contracts. The bill, which was sparked by an examination of Blue Cross Blue Shield (BCBS) of Massachusetts, will still need the approval of the House and governor.

As you may remember (see here and here), BCBS paid an $11 million severance to a departing executive who had presided over serious financial losses at the agency while rates for the insured were ascending and board members were being paid as much as $90,000 per year. Massachusetts Attorney General Martha Coakley, who approves of the bill, says, “Voluntary service by board members is the practice at the overwhelming majority of public charities, and for good reason…Compensation of board members raises concerns about maintaining board independence and ensuring the proper use of charitable funds.” Coakley has previously expressed concern that the pay muddies the fiduciary responsibility of board members to the public.

NPQ would love to hear your thoughts about this bill and Coakley’s sentiment.–Ruth McCambridge